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Opec looks set to maintain oil output

Fri, Dec 04, 2015 - 7:17 PM

[VIENNA] Opec appeared on course to maintain current oil output at a meeting here Friday rather than cut production to lift sagging crude prices.

Despite oil prices plunging by more than 60 per cent in 18 months, OPEC kingpin Saudi Arabia and the cartel's other Gulf state members are defying calls to reduce output - in a year-long strategy of attempting to preserve market share and fend off competition from non-Opec and world leading producers Russia and the United States.

Saudi Arabia on Friday repeated the kingdom's stance that it would be willing to cut as long as non-Opec also reduces its output.

"We have said on more than one occasion that we are willing to cooperate with anyone that will help balance the market...with us," Saudi oil minister Ali al-Naimi told reporters gathered at OPEC headquarters in Vienna.

"Everyone is concerned about... the prices, no one is happy," said Iraq's oil minister Adil Abd Al-Mahdi.

Iran's Oil Minister Bijan Zanganeh told reporters Friday that he did not "expect (Opec) to do anything" regarding reduction.

For its part, Iran has indicated that it would not take part in any cartel-wide cuts until its own output returns to pre-sanction levels.

Markets expect the Organisation of the Petroleum Exporting Countries - whose dozen members together pump out more than one-third of the world's oil - to leave its daily oil output ceiling at 30 million barrels, although it may increase this to reflect Indonesia's return to the cartel after a six-year absence.

According to a survey by Bloomberg, Opec production in November rose to an above-target 32.1 million barrels per day.

And Iran on Thursday said it would not bow to pressure for it to avoid increasing its production following the lifting of sanctions that had been imposed due to its disputed nuclear programme.

This despite slowing growth in global oil demand, largely because of weaker economic output in China, the world's biggest consumer of energy.

Friday's meeting in the Austrian capital will meanwhile see Opec approve Indonesia's return to the organisation. It had departed in 2009 after southeast Asia's largest economy became a net importer of oil.

Indonesia is producing about 850,000 barrels of oil per day and Opec could increase its daily output ceiling to 30.85 million to reflect the change, according to analysts.

Indonesia's re-entry "would simply acknowledge the reclassification of Indonesian output from non-Opec to Opec production, it would not amount to an increase in overall global supply", said Julian Jessop, analyst at Capital Economics research group.

On markets Friday, US oil benchmark West Texas Intermediate (WTI) for delivery in January was up 37 US cents at US$41.45 a barrel.

Brent North Sea crude for January was trading 53 US cents higher at US$44.37.

Both contracts had gained since a sharp fall on Wednesday that saw WTI close below US$40 for the first time since late August.

In June last year, crude had traded above US$100 a barrel, but has since plunged on a global supply glut, weak demand growth and a strong dollar.

"While oil advanced (Friday)... there is really nothing much to cheer about," said Bernard Aw, market strategist at IG Markets in Singapore.

"Saudi Arabia is adamant that any output cuts by the group needs to be accompanied by non-Opec producers such as Russia."